Curate, create and conquer: Journalism 2.0 startups to watch

The race to uncover the next big thing in journalism is firmly underway. While media giants like AOL and Yahoo experiment with content betas, a small army of startups continue to jostle for position with new staffers, new technology, and new ideas. And they’re doing it almost exclusively online.

PandoDaily founder Sarah Lacey

Putting down roots

In many ways, the Internet has leveled the playing field in the digital media space. Where a few prominent outlets like the New York Times and Wall Street Journal once towered over all else, a complex ecosystem of online news sites, blogs and other upstarts now challenges their superiority. American University even offers a master’s degree in media entrepeneurship now.

This year’s most promising new venture may be PandoDaily, a blog launched amid much fanfare this month. In its infancy, PandoDaily is already slated to become the site of record for tech startups. Sarah Lacy, a former TechCrunch reporter, developed the blog after raising an impressive $2.5 million. The name derives from a type of tree with an impressive root system used to continually shoot up new trees, mirroring the Silicon Valley startup environment.

PandoDaily’s success can be partially attributed to the high-profile status of its founder, but the money trail has some important clues too. In her inaugural post, Lacy disclosed that she had received funding from Silicon Valley tycoons, including Peter Thiel and Marc Andreessen. A strong case could be made that the shrewd investors behind Facebook, Groupon and Zynga are capitalizing on a billion-dollar market opportunity.

Shafqat Islam, a digital media entrepreneur, said recent structural change in the industry had opened up large opportunities for innovation. Islam, founder of NewsCred, a startup that enables publishers to monetize millions of dollars’ worth of content through licensing, said his concept holds timely appeal. “Our investors liked our business because it is taking on a big, challenging space with some legacy incumbents ripe for disruption,” he said.

The business of making money

Not everyone in the tech world is convinced that digital media companies are a wise investment. Angel investor Hussein Kanji, formerly of Accel Partners, typically funds media and entertainment companies, but has his skepticism about the latest crop of outlets. “I’m not sure how many of these startups can and will make money,” Kanji said.

The money question hasn’t necessarily been answered on the other side of the scale, either. Many media giants have yet to settle on a sustainable business model for online content. In a bid to increase revenue and sales on a local level, AOL launched Patch to cover hyper-local news, and Yahoo acquired Associated Content in May 2010 at a reported $100 million. Following tweaks to Google algorithms early in 2011, the prolific content farm is now re-branded as Yahoo Voices, offering small sums to citizen contributors, with varying degrees of success. Presumably, Yahoo’s top executives realized too late the importance of quality over quantity; sparking controversy, the decision was made to delete 75,000 articles.

Investors see strong potential in the companies that curate, rather than create, content. A group of technologies broadly defined as “personalized news aggregators” or “content curators” have emerged to distribute information, recommend news articles to users and offer publishers opportunities to monetize content through targeted advertising. “We have very dedicated investors who believe in both the space and the product,” said Cristina Cordova, head of business development at Pulse, a personalized news-reading app for the iPad, iPhone and Android. “Technology will continue to revolutionize traditional businesses as it always has,” she added.

Pulse’s co-founders, both engineers, were a few months shy of graduating from Stanford University when they decided to design a more engaging way to read the news. The reaction was immediate; despite early flaws in the functionality, Pulse became one of the most popular products in the App Store, receiving honorable mention from Steve Jobs.

Oladayo S. Olagunju, founder of Nyoombl, said entrepreneurs in this space are a uniquely passionate bunch. Invigorated by the opportunities to “democratize conversations,” Olanguju said he is not concerned with making a quick buck. “We have vision and will work on things that are a decade out.”

Here are some of the most intriguing startups in both content curating and creation. This list is by no means exhaustive, but it includes some of the emerging digital media companies that are poised for success.

The content curators

This new breed is concerned with content curation rather than ownership. Author Clay Johnson argues in his new book Information Diet that consumers feel inundated with content. These new technologies help consumers weed through the expanse of junk online.

The stand-out successes in this category are Flipboard for its stunning user interface, Zite, a newsapp for the iPad that was recently acquired by CNN, and Pulse, an app which partners with top-tier news organizations to drive cross-platform news consumption, including the Wall Street Journal, CNN, and our very own, Digital Trends.

The content creators

The tech community can make or break you in 140 characters or less. The top bloggers understand this better than anyone – they have carefully aligned themselves with the most influential Twitterati to ensure consistently high traffic. Many successful bloggers have been buoyed by partnerships with larger news organizations like the Huffington Post and Business Insider.

The most successful startups in this category welcome citizen contributors. Digital media sites that crowdsource content, such as Allvoices and Digital Journal, reward their best writers with points. Non-profit organizations have also made significant gains in this space. California Watch and ProPublica support high-impact reporting through foundations and grants, while Spot.us can be described as the “Kickstarter” for news journalism.

There are myriad challenges in this category, but the best writers have been rewarded with book deals, syndicated column offers, and skyrocketing page views.